EPA finalizes Cross State Air Pollution Rule

The U.S. Environmental Protection Agency (EPA) finalized the Cross State Air Pollution Rule (CSAPR), formerly known as the Clean Air Transport Rule (CATR), on July 6. The rule, which was proposed by the EPA in July 2010, was created to reduce the interstate transport of emissions from power plants in the eastern U.S. as required by the Clean Air Act. The measure, along with a proposal aimed at cutting summertime smog in six states, is expected to cost the utility industry billions in emissions control upgrades over several years.

Under the regulation, plants in affected states will begin reducing emissions as early as January 2012. The rule applies to sulfur dioxide (SO2) and nitrous oxide (NOx) emissions levels in 27 states, with the goal of reducing fine particulate matter (PM2.5). By 2014, the rule and other state and EPA actions are expected to reduce SO2 emissions by 73 percent and NOx emissions are by 54 percent from 2005 levels.

The emissions reductions levels in the finalized rule indicate a stricter emissions reduction goal than previously proposed. “We determined we could get more reductions than we had originally proposed,” said EPA Administrator Lisa P. Jackson during a press call on July 7.

Todd Palmer, an environmental lawyer with Michael Best & Friedrich LLP, said that CSAPR is different from other Clean Air Act programs in that it does not impose direct emissions limit rates on particular power plants. Instead, “each state is given a limit of how much they can emit from all electric generating units within that state.”

The stricter emissions reductions goal is paired with an allowance for interstate trading, which was not included in the proposed rulemaking. Interstate trading, however, was included in CATR’s predecessor, the Clean Air Interstate Rule (CAIR), which was remanded because it called for unlimited trading with no limits on emission limits. “The argument with CAIR became that there was potential under unlimited trading that a state would impose no emissions restrictions on its units; it would just trade,” Palmer said.

CSAPR has adopted a blend of both ideas: a limited form of trading with a statewide cap of SO2 and NOx emissions. Under the CSAPR trading program, states are allowed to emit their cap plus 18-22 percent more than the cap, if sources within their borders comply with trading.

In order to help states meet compliance, EPA is adopting federal implementation plans, or FIPs, for each of the states covered by this rule. EPA encourages states to replace these FIPs with State Implementation Plans, or SIPs, starting as early as 2013.

Another change in the finalized CSAPR from the proposed rule is the inclusion of the state of Texas. “Texas was included because EPA concluded that emissions from Texas were traveling downwind and giving other states problems in meeting the PM2.5  ambient air standards,” Palmer said.

Tzu-Yuan Su, analyst of regulatory and legislative affairs for Fellon-McCord, said the FIPs and SIPs introduced under CSAPR are similar to those that have caused “a bit of a legal tousle” between Texas and the EPA in regards to other Clean Air Act programs. “How the Texas commission handles this will be interesting.”

CSAPR is slated to go into effect under two phases: the Phase 1 compliance date of 2012, and the Phase 2 compliance date of 2014. This “aggressive compliance schedule” could have the potential to drive up costs of compliance technology, Palmer said.

“Many are concerned that there are not enough resources out there to timely install SO2 and NOx technology to meet the rule,” Palmer said.

According to the EPA, the power sector has already spent $1.6 billion to install pollution controls that helped bring emissions in line with the rule’s predecessor, CAIR.

Another variation between the final rulemaking a CAIR exists in terms of the Regional Haze Program. In the past, if a unit was in compliance with CAIR, it was also in compliance with Best Alternative Retrofit Technology. However, CSAPR does not make that conclusion.

One other difference exists in the allocation of credits under CSAPR. “The allocations of these credits will be based upon a heat input basis for emission units, with the restriction that no unit can receive allocations in excess of its maximum historic emission levels,” Palmer said.  Without this restriction, sources which burn natural gas, and thereby emit lower SO2 rates would receive far more SO2 allocations than the source had historically emitted.

In a separate but related regulatory action, EPA has also issued a supplemental notice of proposed rulemaking to require six states – Iowa, Kansas, Michigan, Missouri, Oklahoma and Wisconsin – to make summertime NOx reductions under the CSAPR ozone-season control program. Five of those states are already covered in the final rule for interstate fine particle pollution (PM2.5). Finalizing this supplemental proposal would bring the total number of covered states under the CSAPR to 28.

The proposal is open for public review and comment for 45 days after publication in the Federal Register. EPA expects to finalize this rulemaking by Nov. 1.

EPA’s intended goal through CSAPR is cleaner air leading to increased health. A recent study by Harvard and MIT found that reductions in cases of asthma and other diseases as a result of this ruling could cut health care costs by over $20 billion a year (up to $300 billion total).

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